Vergara Hermosilla v. The Coca-Cola Company demonstrates that probably the most significant role of a contract is to make sure that everyone is on the same page. But business happens fast, so the writings aren’t always in place as fast as they should be. Here, Coca-Cola was whacked with a preliminary injunction all because of a misunderstanding about the fundamental terms of the agreement.

Coca-Cola engaged Universal Music Group to assist it with creating a revised version of a single called “Wavin’ Flag (Coca-Cola Celebration Mix).” Coca-Cola wanted a version with Spanish language lyrics it could use during the 2010 FIFA World Cup games. Jose Puig, at Universal Latin America, contacted plaintiff Rafael Vergara Hermosilla by telephone (uh-oh) to ask him to create the translation and mix the new version. Puig testified he said it would be a work made for hire for $6,000; Vergara testified it wasn’t going to be a work made for hire and he has never written a work made for hire in his career.

Vergara completed the translation, as well as audio files demonstrating how the lyrics were to be sung, the next day. More work was done over the next few weeks and the final product was first published in the iTunes Mexican download site and on Coca-Cola’s Mexican website. Enjoy a video of the work:

Then the fighting begins. The parties disputed the terms of the agreement. Vergara finally wrote:

But because I am a man of my word and honor, that is not moved by economic motives, my only request is that my credits are respected as producer and adapter of the Spanish version (that every time the name of any composer of this version appears, my name appears as adapter), and obviously, the credits for the production that are detailed in the invoice sent for this production, which I have detailed below.

For the adaptation, you may consider it a work for hire with no economic compensation to that respect. I believe what’s legal is a dollar.

I hope that this leaves clear what my work was and what my good intentions were from the beginning.

Universal then botched this gift. It sent a draft agreement, but apparently one that didn’t incorporate the terms Vergara described:

I appreciate your sending me the contracts. However, my proposal was clear and it was just that, a proposal, since you requested my help because you knew things had not been done right. My only request regarding said proposal was a series of things that are not included in what you sent me. Moreover, nothing of what I proposed to you is included in the contracts.

I want you to know I’m very upset and rather dissapointed [sic], because my proposal was based more on our friendship than anything else, and what I got does not honor the agreements.

Taking into account the above, I hereby inform you that the proposal of last Friday from which the contracts would supposedly derive is revoked as of now and without effect.

Lawsuit commenced.

Coca-Cola raised the three common defenses to copyright ownership disputes: it had an implied, nonexclusive license; it owned the work as a work-made-for-hire; and Coca-Cola was a joint author. It also argued that the work wasn’t registered with the U.S. Copyright Office.

Nothing worked. With respect to the lack of registration, under Section 411 of the Copyright Act only a U.S. work must be registered before a lawsuit can be filed. This work was first published in Mexico, so no registration needed.

As to the nonexclusive license defense, there was a nonexclusive license when the work was first published, but a nonexclusive license is revocable until the licensor accepts consideration. Here, Vergara had not accepted any consideration and the license was revoked by filing the lawsuit.

It also couldn’t have been a work-made-for-hire; since Vergara wasn’t an employee under section 101(1) there would have to be a written instrument stating that the work was a work made for hire. No writing, so no work made for hire.

Finally, Coca-Cola wasn’t a joint author. Neither Coca-Cola nor Universal worked with Vergara with the lyrics. Instead, Vergara created an authorized derivative work, but Coca-Cola’s ownership of the parent work didn’t give it any ownership interest in the derivative. Coca-Cola loses its weak case on all four theories.

But there was no injunction. The court agreed with Vergara that, as a songwriter, Vergara’s irreparable harm was the loss of credit for having worked on the song. But Coca-Cola testified that it would lose $15,050,000.00 if it could not use the song in the U.S., outweighing Vergara’s name recognition interest. There would be no harm to Coca-Cola if Vergara was given the name recognition, so it was

ORDERED AND ADJUDGED that, by June 11, 2010, Defendant Coca-Cola and any individuals or entities acting under its direction or control cease advertising, selling, distributing, or otherwise disseminating “Wavin’ Flag (Coca-Cola Spanish Celebration Mix)” unless adaptation credit is given to Vergara whenever his lyrics are used and either: (1) the original English composer is credited or (2) a composer is often credited with such a use. It is further

ORDERED AND ADJUDGED that, by June 11, 2010, Defendant Coca-Cola post on its website on the page offering “Wavin’ Flag (Coca-Cola Spanish Celebration Mix)” for download, a conspicuous notice indicating Vergara’s contribution to the song.

ORDERED AND ADJUDGED that, by June 12, 2010, Defendant Coca-Cola file with the Court a Notice, stating that Coca-Cola has complied with the above requirements.

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Ms. Chestek is admitted to practice in Connecticut, the District of Columbia, Massachusetts, New York and North Carolina and is Board Certified by the North Carolina State Bar's Board of Legal Specialization in Trademark Law.

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